If you use your car for business purposes, repairs may be deductible.
According to the official Internal Revenue Service's website, it's possible your car repairs can be counted as a tax deduction. But it's a little more complicated than that simple answer. There are two ways to deduct car expenses. The first is to take the standard mileage deduction, and the second is to track actual expenses.
Business versus Personal Use
Expenses for personal use of your car are not deductible. You are allowed to claim a deduction only if your car is used for business reasons. Unless the vehicle is used 100 percent for business, you'll have to calculate what percentage of the miles you drove over the course of the year was for business.
Actual Expenses
Here's how you would be able to deduct the cost of your car repairs; this method is contingent on excellent record keeping and maintaining all your receipts. As the year progresses, keep a running log of all miles you drive for business reasons. At the end of the year, take the total miles driven and compare the number of business miles to the total mileage, to arrive at a percentage of distance the car was used for business purposes. That number is the percentage of car expenses you are allowed to deduct.
Throughout the year, keep a record of all car expenses. Don't forget to include gas, oil, tires, insurance, license and registration, depreciation, lease payments, and repairs. Add all these up and take a percentage of the total equal to the percentage of the total mileage for which the car was used for business purposes. The result is what you can claim as a deductible business expense.
Mileage Deduction
The issue is whether tracking actual expenses will mean a greater deduction than simply taking the standard mileage deduction, which was .555 cents a mile as of 2012. Since you're already keeping track of the miles you use your car for business, the IRS suggests you calculate your standard mileage deduction and compare it to your actual expenses deduction, and use whichever is greater.
What your deduction really hinges on is "adequate records," which is the concept the IRS uses in deciding whether the expense is legitimate. Regarding car repairs, the actual receipt should be adequate.
Tags: actual expenses, business purposes, mileage deduction, standard mileage, standard mileage deduction, used business
